Palm Oil Futures Were Sharply Lower

Palm Oil Futures Were Sharply Lower

Palm oil futures were sharply lower following a long holiday weekend with most nearby contracts down more than two percent (November contract -53 ringgit per tonne)

Overnight weakness in soybean oil futures and cargo surveyor data that suggested exports during August were lower than expected (but still up more than 15 percent from July) weighed on palm oil prices. The decline drove the most-actively traded November contract down back below the psychologically important 2,200 ringgit level, but technical buying at the 200-day moving average limited the fall. The move lower, left palm oil futures almost six percent below the recent high and combined with the rally in soybean oil futures drove the spread between soybean oil and palm oil back above six cents per gallon.

Vegetable oil futures were mixed on the Dalian exchange with palm oil futures narrowly higher (January contract +8 yuan per tonne) and soybean oil futures down about 1/2 percent (January contract -30 yuan per tonne). Technically-driven buying at the 10-day moving average supported gains in palm oil futures while selling just below the psychologically critical 6,100 yuan level weighed on soybean oil values.

Canola futures were mixed with nearby contracts marginally lower (November contract -C$0.50 per tonne) and deferred contracts unchanged (July contract) or about 1/4 percent higher (November 2020 contract +C$1.20 per tonne). Technical selling at the 50-day moving average weighed on canola contracts while buying at the lower Bollinger band limited the decline. Seasonal price pressures as harvest advance and concerns about growing canola stocks in Statistics Canada’s quarterly stocks report, scheduled for release on Friday, also triggered selling. However, despite the decline, prices remain in the same trading channel of the last six weeks.

Most rapeseed contracts were marginally lower (November contact -€0.25 per tonne) on light profit-taking following the life-of-contract high set last week. Despite two consecutive days of small losses, rapeseed futures remain firmly in an uptrend driven by crop losses in Europe.

OPTIMISM ABOUT BIOFUELS PACKAGE TRIGGERS FUND SPREADING AND DRIVES SOYBEAN OIL BACK ABOVE 29 CENTS

Soybean futures were marginally mixed following the long holiday weekend with nearby contracts slightly lower (November contract -1/2 cent per bushel) and deferred contracts gaining as much as 1/4 percent (November 2020 contract +1 1/2 cent). The market traded both sides of unchanged as trade news flow weighed on prices early, but bullish export data helped trigger a rally. The 10-day moving average also provided support with November futures settling a little more than one cent below the high of the day. Funds were reported buyers of 5,000 soybean contracts, 5,000 soybean oil contracts and were reported sellers of 2,000 soybean meal contracts.

Soybean oil futures were sharply higher with most contracts gaining about one percent (December contract +28 basis points). Optimism about an announcement at some point this week by President Trump, which is expected to include provisions to boost domestic biofuel usage, triggered oil/meal spreading and drove prices more than 60 basis points above the overnight lows. The gains also pushed the most-actively traded December contract back above the psychologically critical 29-cent level for the first time since August 22 and left the contract above the 20-day moving average. Technically-driven buying at the 50-day moving average also helped support prices and pushed futures significantly above the upper end of the recent trading range.

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